Whether you travel for business or are just after a bit of R&R, a credit card can be a convenient way to pay when abroad. The main credit card brands of Mastercard and Visa are accepted in most places and save you having to carry large amounts of foreign currency around. But before you head off to foreign shores and start flashing your plastic, there is one critical thing you should check.
Does the card have a non-sterling transaction fee?
This is a fee your card provider will charge if you use your card for a transaction that is not conducted in pounds sterling. You can find whether a card has a non-sterling transaction fee in the card’s summary box online or in the terms and conditions. Non-sterling transaction fees are typically around 3%; this means if you use your card for the equivalent of a £100 transaction abroad, you will incur charges of £3. This fee will also apply if you book your holiday through a foreign provider that uses the local currency to charge the amount to your card.
What can I do about this?
You can look for cards that do not have a non-sterling transaction fee. If you search for cards specifically designed for travel, these typically have no fees attached to overseas usage. This will mean that any transactions conducted in the local currency will not incur any extra fee. Also look at other standard cards that may not sell themselves as travel cards. Some include fee-free overseas usage as an added perk in their package.
Other things to be aware of
It is worth looking at any cash withdrawal fees the card may have. Some travel-specific cards will waive the fee on any ATM withdrawals made outside the country, meaning if you are away and are in need of some cash, you can make a withdrawal and not have to pay a charge on it.
A key point with cards that do not carry a non-sterling transaction fee is to make sure that you make any purchases in the local currency. If you were to make a purchase using sterling, the bank or retailer may introduce their own charges.
Similarly, with cash withdrawals, check whether the fee-free withdrawals also apply to withdrawals made in the UK. Credit cards often have a charge for withdrawing cash, so you may find that while you won’t be charged for withdrawing money abroad, you could incur costs if you try the same thing on home soil.
Finally, be aware of the interest charge if you do end up making a cash withdrawal abroad. This will be charged daily from when you make your withdrawal until you pay off your balance. Therefore, when selecting a card to use when travelling, it is best to look for the one with the lowest rate of interest for cash withdrawals, unless you are prepared to immediately go online and pay off the full balance.
Other things to do before you travel
Before you step on that plane/train/boat, it is worth informing your credit card provider of the date when you will be going and which countries you plan to use your card in. If you don’t do this, your lender could think that your card had been stolen or someone was committing fraud with it and therefore freeze your account.
While credit cards are a convenient way of spending abroad, it is also wise to carry some backup cash, a debit card or travellers cheques, just in case your card is stolen or your account is locked for some reason.
